Lunchtime Must-Read: Jens H.E. Christensen and Simon Kwan: Assessing Expectations of Monetary Policy

Jens H.E. Christensen and Simon Kwan: Assessing Expectations of Monetary Policy: “An ongoing concern has been that the public might misconstrue the Fed’s forward guidance…

…about future monetary policy and underappreciate the extent to which short-term interest rates may vary with future news about the economy. Evidence based on surveys, market expectations, and model estimates show that the public seems to expect a more accommodative policy than Federal Open Market Committee participants. The public also may be less uncertain about these forecasts than policymakers.”